Ann Taylor upgraded: Ignore the stock or buy ahead of earnings report?

More

Ann Taylor (ANN) was upgraded Monday, according to TheStreet.com. Jesup & Lamont calls the stock a buy now instead of a hold. You're never far from the analyst game when you trade on Wall Street. Question is, what should you do about this retailer? Should you give it a position in your own portfolio?

I'm not the biggest fan of Ann Taylor. I don't like the fundamentals. I made this amply clear back in August when I discussed the company's second quarter.

However, in case you haven't noticed, the bulls are ruling things at the moment. How long that will last is up for debate. I've been anticipating a correction for a long time now. I've been completely, utterly wrong.

So, now that Ann Taylor has been upgraded, I have to say that the stock may be in an interesting position, at least from a price-action perspective. Shares gained 8% on Monday, backed by above-average volume, and closed near the high of the day. Pretty good technical sign.

However, the quarterly report is coming up this week, on Friday. The call is for a jump in profit, actually, according to Earnings.com. From break-even to 6 cents per share. Ann Taylor beat estimates in Q2.

Could this situation have the makings of a good earnings trade? I think it might. Although I place emphasis on the word trade.

Considering this unstoppable market, it is conceivable that there is a quick buy-and-sell thesis here. Look at Abercrombie & Fitch (ANF). Again, fundamentally, it's not so hot. But the stock continues on an upward path.

Traders should keep their eye on Ann Taylor, looking for a pullback. Regular investors who are only searching for long-term ideas in the market need not apply. If you do decide to trade this company, have an exit strategy in place. As always, perform your own due diligence before taking any action, and understand the risk involved (in this case, it's high).

Disclosure: I don't own any company mentioned; positions can change without notice.

Reader Comments (Page 1 of 1)

Add your comments

Please keep your comments relevant to this blog entry. Email addresses are never displayed, but they are required to confirm your comments.

When you enter your name and email address, you'll be sent a link to confirm your comment, and a password. To leave another comment, just use that password.

To create a live link, simply type the URL (including http://) or email address and we will make it a live link for you. You can put up to 3 URLs in your comments. Line breaks and paragraphs are automatically converted — no need to use <p> or <br /> tags.

Symbol Lookup
IndexesChangePrice
DJIA+150.2510,058.64
NASDAQ+24.822,150.87
S&P 500+13.781,070.52

Last updated: February 09, 2010: 04:46 PM

Hot Stocks

DailyFinance Headlines

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance

WalletPop Headlines